India's Singh highlights bright side of crashing rupee

Prime Minister Manmohan Singh sought to soothe worries about the Indian economy on Friday, telling parliament that the crashing value of the rupee was part of a needed adjustment that would make Asia's third-largest economy more competitive.

The speech was the veteran economist's first substantial comment to parliament since the rupee suffered its steepest ever monthly fall in recent weeks, bringing back memories of a 1991 balance of payments crisis that made Singh famous.

But he said that a weaker currency was the natural outcome of several years of high inflation, and although the rupee had overshot in the foreign exchange market its decline would bring some economic benefits.

"To some extent, depreciation can be good for the economy as this will help to increase our export competitiveness and discourage imports," he said.

In response to his parliament speech, opposition leader Arun Jaitley said Singh's track record as prime minister was of populist policies, not reform.

"If you continue to follow the course, then the legacy that you leave behind will not be the legacy that you left behind as the finance minister. That legacy was different," Jaitley told the upper house.

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